Publication: Journal of Economic Education
Volume: Volume 31, No. 1
Issue: Winter 2000
Pages: 66-75
Author(s): Donghyun Park (Nanyang Technological University)
Address (Principal Author):Donghyun Park
Lecturer
Nanyang Technological University
Nanyang Business School
Room No. S3 - B1A - 10
Singapore 639798
65-790-6130
fax: 65-791-3697
Internet Address (Principal Author):adpark@ntu.edu.sg
Title: Price Discrimination, Economies of Scale and Profits
Abstract: A price-discriminating monopolist facing two markets under economies of scale may sell in both markets even if one market is inherently unprofitable in the sense that price is always below average cost. The basic intuition is that higher profits in the profitable market caused by economies of scale may exceed the losses incurred in the unprofitable market.
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